History of The Upjohn Company's International Division  
  By David S. Creamer, Upjohn 1960-1990  

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Upjohn's global presence evolved from early export sales through their two seaboard branches. Here is the story........


The Early Export Sales


Dr. Lawrence Northcote Upjohn, cousin of the founder and first President of Upjohn Company W. E. Upjohn, was named branch manager of the New York Branch in 1906. At that time, the few export sales that were made came from the two seaboard branches, New York and San Francisco. The San Francisco office was asked to promote and accept orders from the Far East, in particular the markets in China and India. Upjohn set up a London agency in the 1890’s, which was serviced from the New York office. The London agency (John Timpson & Company) wrote orders from several European countries. In addition to the London agency, L. N. hired salesmen to cover the Latin American markets. While in New York, L.N. devoted a great deal of time and effort to the export sales. He experienced minimal success as the foreign buyers could not create demand for products without extra discount, and they expected long term credit. L. N. wrote, “This was troublesome for the home office and seemed to be unprofitable. As a result the home office reluctantly complied with request for foreign goods from New York and San Francisco, but to say the least they passively discouraged export business.”


The home office attitude towards export sales was about to change. In 1931, L.N. Upjohn succeeded W. E. Upjohn as President and became The Upjohn Company’s second president. He served as president until his retirement in 1953. During his tenure and after World War II, he traveled around the world and met with sales employees and agents to assess the needs and potential of each countries market. In 1948, he wrote a detailed and voluminous report of his travels. Many parts of his report were reproduced in the Company’s monthly in house magazine, The Overflow. The following is a document about the early export salesmen. The author and date of this typewritten document is unknown.


There are references in the Overflow volumes to sales offices in Mexico, Cuba, and Puerto Rico during the 1920s, and to several traveling salesmen in Central and South America. Typical of the "international salesman" was Ernesto Inderbitzen, a Swiss who spoke Spanish, French, German, and Italian, plus a number of Mexican-Indian dialects. Hired in 1926, Inderbitzen became senior salesman in Mexico after weathering natural disasters and a revolution. He first worked out of the Kansas City branch, which apparently handled the northern Mexico export business from around 1925 to 1930.

By the mid-1930s, Upjohn salesmen were regularly detailing in Panama, Ecuador, Venezuela, and Central America. The hours were long, the conditions often primitive, but the worst part of the job was the slowness of communication. Salesmen on extended trips didn't receive news from home--or their paychecks--for months at a time.

In the 1930s, the San Francisco office began actively to explore sales to the Far East. There was already some activity--in 1929, there is reference to an Upjohn agent in Tokyo, for instance--and the branch had had a sales office in the Hawaiian Islands for many years. In 1931, Tse Wei Wu of Shanghai was engaged as an Upjohn representative to China, opening the door to a potentially enormous market. Wu, intelligent and strikingly handsome, was equally at home in a Western suit or traditional Chinese robe and fan. He carried the Upjohn name through his offices in Shanghai and Hong Kong for many successful years, and even visited Kalamazoo; however, it was discovered that he was manufacturing his own pharmaceuticals and affixing the Upjohn label to them, causing Upjohn's China business to collapse overnight.


In October 1931, San Francisco arranged for the T.M. Thakore Co. of· Bombay to become the company's sole representative for India, Burma, and Ceylon. This resulted in a successful relationship for many years, until the partition of Pakistan brought it to a halt in 1952.

By the mid-1930s, Upjohn salesmen also were being assigned to the "Philippine Islands territory."  Closer to home, the history of Upjohn selling in Canada is a long and illustrious one. Upjohn pharmaceuticals had undoubtedly been exported to Canada beginning in 1927, but the company's active sales presence began in earnest when Malcolm Galbraith was named director of sales in 1929. Galbraith, a Canadian by birth, set up a Toronto branch in 1935. This was Upjohn's first foreign sales branch.

The Formation of the Export Office and Division


The following are excerpts believed to be from L N Upjohn report.


In the 1930’s, there was an increased annoyance in getting export orders out promptly and Dr. Adams, production manager, assigned Mr. Sidney Steensma to become expediter.  The result of this was that Mr. Steensma gradually assumed all of the export work, both shipping and office management.  The branch office export departments were closed and the export office became centralized in Kalamazoo around 1940 under Mr. Steensma.
During World War II, the export business picked up voluntary orders that rapidly jumped to more than a million dollars by 1945.  This process seemed to have generated a reversal of feelings on the part of management, which gradually gave up its opposition and became willing to support export sales.  Mr. Henry Roberts, a divisional sale manager of the New York office, was brought in as the export sales manager on January 1, 1947. 
In 1947, general sales manager R.S. Jordan, with Mr. R.G. White, made an extended visit to Latin America, investigating possibilities and making contacts.  In 1948, Mr. Roberts went around the world investigating Eastern countries, most particularly sojourning and making a study of the situation in India.  In 1950, Mr. R.C. White made a careful inspection and study of markets in the Mediterranean and North African region.

 A fully staffed export office had been gradually developed in the basement of the administration building on Henrietta Street, and in 1950 was moved to larger permanent quarters at the Portage Road plant, with Mr. Henry B. Roberts as export sales manager, and Mr. Robert Boudeman as office manager.


As indicated by the Company’s desire to become more active in the ever- increasing world trade the export office became a division of the Company. Effective January 1, 1950, the Export Division became the Company’s tenth division. Eight people were transferred to the new division. They included Manager R.S. Jordan, Louie Cinabro, Bob Collins, Tony Dacoba, Dale Finch, Bob Hiler, LaVerle Hinkson, Nancy LaMieux, and Lou Ann Rineholt.


The Export Division was the first break from all other domestic functions and responsibilities. General Manage Jordan reported to Executive Vice-President C. V. Patterson. Bob Hiler, Head of the Department of Planning and Inventory Control, reported to Jordan. All other Department Heads reported to R. M. Boudeman, Office Manager. Department of Traffic and Shipping was Eugene Badger. Bob Collins headed the newly created Accounting Department for the Export Division. Harley Hieney became head of Price Determination and Catalogs Department.  Because of the vast differences between domestic business and doing business in multiple foreign countries, the Export Division was to become totally independent and separated from all other functions and responsibilities within the Company.


From Export to International


As the sales and demand for Upjohn products in the foreign markets increased, there would be significant changes in the organizational structure of the Export Division within the next ten-year period. As indicated above, Canada was Upjohn’s first foreign branch. In 1952, Canada and England where the first wholly-owned foreign subsidiaries of TUC; however, they were joined by subsidiaries in Australia, Belgium, Brazil, Colombia, France, Italy, Japan, Mexico, Philippines, South Africa, and Venezuela later in the same decade. TUC was well on its way to becoming a global company.


 E. Gifford Upjohn, president, announced in December 1957 there were to be major operational changes in the Export Division. Effective January 1, 1958, three new domestic subsidiaries were to be organized necessitated by the continued growth of the company’s export business. The domestic subsidiaries are designed to meet the growing demands of Upjohn products abroad, as well as to increase flexibility of international operations in meeting special marketing problems in each of the export markets. As recommended by the Chicago based law firm, Baker McKenzie, the three subsidiaries were;


Upjohn International Inc.


This original name of this company was Upjohn International Operations Inc. A management service company, based in Kalamazoo, served as headquarters for all foreign subsidiary corporations. Management functions and staff activities formerly carried out by the Export Division were taken over by this management company. Eventually the staff functions offered technical assistance in the fields of accounting, advertising, auditing, engineering, legal and tax, financial, and medical services production, product development, sales education, market research and planning, inventory control, personnel, veterinary activities, and management assistance. The number of employees grew from 57 to 126 by December 1965. In February 1985, there were 270 employed by Upjohn International Inc.


Under the U.S. Internal Revenue Code, all the expenses of the management company were deemed to be for the sole benefit of the foreign subsidiaries and therefore not deductible in the U. S. All the expenses of Upjohn International Inc were allocated to the foreign subsidiaries; hence, their income always equaled the expenses of this company. As some foreign jurisdictions resisted these “technical service charges” creative ways to collect the charges became a challenge.


The first officers of Upjohn International Inc. were; R.S. Jordan, president; E.H. Coleman, executive vice president; R. M. Boudaman, executive vice president; H. R. Roberts, vice president; J. A. Braun, vice president; R D. Tedrow, secretary and R. W. Collins, treasurer. Succeeding presidents were R. M. Boudeman, R. D. Tedrow, Dan Witcher, Selvi Vescovi and Leigh Smith.


Upjohn Inter-American Corporation


This company, which was also headquartered in Kalamazoo, was organized to handle trade within the Western Hemisphere except in those countries where Upjohn operated subsidiaries such as Canada, Brazil, and Mexico. Initially Upjohn Inter-America operated sales branches in Panama, Peru, Puerto Rico, and Venezuela. In later years, Canada, Dominion Republic, and Ecuador were added as branches. Officers in this corporation were Jordan, president; Tedrow, secretary; and Collins, treasurer.


Under the U. S. Internal Revenue Code this company would qualify as a Western Hemisphere Trade Corporation. In order to encourage trade in the Western Hemisphere, qualifying companies would be taxed at three-fourths of the regular tax rate. The corporate tax rate at the time was 52%, thus, initially Upjohn Inter-American profits were taxed at a rate of 39%


Upjohn Overseas Corporation


This company had its headquarters in Panama with a branch in Hong Kong and, “was set up to take title to and normal control of, certain new overseas companies or investments. Its operation will simplify the use and transfer of capital and will meet certain tax situations more equitably.  The company was under the direction of Eugene Badger.” The main function of Upjohn Overseas was to distribute Upjohn products to the foreign subsidiaries throughout the world. It operated in Panama’s “free trade zone,” meaning that there were no tariffs. Panama imposed a 3% income tax on the inter-company profit of Upjohn Overseas and for several years the U. S. did not impose any tax on their off-shore profits. For several years, they were able to invest 97% of their capital in new subsidiaries rather than at 48% in later years. The officers in this new corporation were Jordan, chairman of the board; Eugene N. Badger, president; Boudeman, vice president; Tedrow, secretary; and Collins, treasurer.


The End of Upjohn International Inc.


Although there were numerous personnel changes during the 1970’s and 1980’s, the organizational structure of Upjohn International Inc. remained intact. As the International sales continued to grow and became a larger portion of Upjohn’s worldwide sales, additional foreign subsidiaries and branches were organized. By the mid-1980’s, there were sixteen pharmaceutical manufacturing plants and four chemical manufacturing plants in foreign countries (not including Puerto Rico). In addition, there were distribution centers in four countries.


Beginning in 1991, the International Division, as it was known, was beginning to be dismantled. Staff functions were being integrated with the parent company. With the merger of Pharmacia in 1995, the three domestic subsidiaries were phased out and the foreign subsidiaries were eliminated or merged into Pharmacia’s foreign affiliates. All that remained was the corporate shell of Upjohn International Inc.


Manufacturing in Puerto Rico 


Although the Puerto Rico manufacturing facilities were not part of the International division’s responsibilities, it was an integral part of the company’s foreign operations.


In 1970, the Company determined that due to increased demands for lincomycin and clindamycin, they would invest in a new plant outside the Kalamazoo area. The last fermentation expansion in Kalamazoo was in 1966. R.M. Boudeman stated, “At that time we recognized we were sitting on top the largest single antibiotics production complex on one site in the world. If anything happened to it, the effects would be crippling. As an insurance against such a disaster, we decided that we had to, have a second plant somewhere away from Kalamazoo.”  The company acquired land in Omaha, Nebraska, and announced that in 1971 they would invest in new facilities, “above $10 million that will greatly increase our capacity to produce antibiotics”.


At that time other manufacturing companies, especially pharmaceutical companies, were making major investments in manufacturing facilities in Puerto Rico. For some fifty years, the U.S. Internal Revenue Code had exempted manufacturing profits for products that were produced in a U. S. Possession territory. (Note: The law was first enacted to encourage U. S. industries to invest in the Philippine Islands, a U. S. Possession at the time.) The incentive was limited for most companies in that U. S.  Possessions imposed a local tax at roughly the same rate as the U. S. corporate rate, and furthermore the U. S. would impose a tax on the repatriated profits. In the late 1950’s, Puerto Rico enacted a law that would exempt from tax all approved locally manufactured products. “Operation Boot Strap,” as the law was called, attracted many pharmaceutical companies.


When Upjohn management began to explore the Puerto Rican alternative, it was determined that to make the same capital investment in fermentation facilities in Puerto Rico as was to be made in Omaha the investment would not be worthwhile. Primarily because of the much higher cost of utilities in Puerto Rico the cost to ferment products was 20%/25% higher, which would negate the tax benefits. With the assistance of Lee, Toomey, and Kent, a Washington DC based law firm, it was determined that more of the manufacturing process done in Puerto Rico, the greater the tax benefit. 


Management decided to invest in a full-fledged pharmaceutical operation, i.e., fermentation facility, chemical extraction and processing plant, and a pharmaceutical finished goods plant. In the fall of 1971, R. M. Boudeman announced in San Juan, Puerto Rico, “A $30 million pharmaceutical plant is to be built by The Upjohn Company about 30 miles west of here”-Barceloneta.


Two U.S. corporations were formed to produce products in Puerto Rico. In 1972, Upjohn Manufacturing Company (UMC) became the worldwide supplier of Cleocin and Lincocin products. In 1975, Upjohn Manufacturing Company-M (UMC-M) became the worldwide supplier of Motrin. The companies operated in Puerto Rico at pretty much full capacity until Pfizer, Inc. abandoned the property in 2003.


If you would like to add your recollections and memories of the International Division to this site please send them to jeremym@upjohn.net

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